Does using a credit card actually build up your credit score or do you have to incur charges by not paying it off for X amount of time to help with your credit rating?

If I'm paying it off every month and using it for everything I buy, am I doing myself a disservice?

  • 4
    As an observation, I've always paid my cards in full every month. I've been doing this for several decades, have had no other debt besides a mortgage (other than a long paid off student loan), and have a credit rating over 800. So it seems obvious that paying in full every month does not harm credit ratings.
    – jamesqf
    Commented Dec 3, 2020 at 17:05
  • 1
    @jamesqf you've got a mortgage... :) My only debt is a CC -- usage rate less than 2% -- my score is also above 800.
    – RonJohn
    Commented Dec 3, 2020 at 17:39
  • You might want to check this question and answer out money.stackexchange.com/q/73652/20835 - to summarize, a Credit Card is really only going to give you a credit identity if you have none. If you have any other loan you are paying off (mortgage, school debt, lease (car or apartment)), it will do more for you than a credit card ever will.
    – Zibbobz
    Commented Dec 4, 2020 at 15:06
  • 5
    NO, paying the outrageous 18-30% CC interest is an absolutely ludicrous proposition for raising your credit score. Before my first major loan of buying a car I only used CCs and paid off in full every month. At the dealership my credit score was about 720 and I got a 0.9% APR on my loan. Fast forward 9 years and I now have a mortgage and my credit score is above 800.
    – MonkeyZeus
    Commented Dec 4, 2020 at 18:45
  • 1

6 Answers 6


If I'm paying it off every month and using it for everything I buy, am I doing myself a disservice?

Not from a credit score perspective. Your credit score is more a measure of how reliable you are with your debt payments and how much you use what credit is given to you. Low utilization and timely payments (of at least the minimum balance) are good - late payments and high utilization are bad.

Use it for what you need, and pay it off every month and you'll be fine.

I say for only what you need, because many people fall into a trap of overspending just to "earn miles" or build credit. If you were going to spend that money anyways, then using credit cards may have a minor benefit, but studies show that people tend to spend more (not per item, but overall due to impulse buys, lack of awareness vs. cash) when using credit cards. It makes no sense to spend more that you would otherwise just to get 2% back in rewards.

  • 8
    "It makes no sense to spend 15% more just to get 2% back in rewards." TBF you also receive 13% more in goods/services that you purchased with that extra spending. Whether or not that's a good thing is a different story.
    – Alexander
    Commented Dec 4, 2020 at 0:50
  • I’d be interested to know if that 15% is for credit vs cash, or credit + debit vs cash - or credit vs debit. Most people my age already use debit cards - would the stats expect them to spend more with a credit card?
    – Tim
    Commented Dec 4, 2020 at 13:04
  • 2
    With regard to the 10-15% more - no need to go around in circles. You posed the Money.SE question Do people tend to spend less when using cash than credit cards? . My answer there spells out the flaws of those studies. If nothing else, one should be aware that correlation doesn't imply causation. I included links to the studies, members are invited to add current ones. (If nothing else, no study makes an effort to separate the 'pay in full' user from those carrying a balance. Commented Dec 4, 2020 at 13:34
  • @JTP-ApologisetoMonica I've taken out the numbers since they are disputed. But I think the point (perhaps off-topic from the original question) is still valid, though. And I tried to separate it from "normal" expenses.
    – D Stanley
    Commented Dec 4, 2020 at 13:57
  • @Tim yes the times they are a changin'. I do think there's a part of debit cards that make them more susceptible to impulse buys but the knowledge that there's a limited supply behind them may help as well. But everyone's different. Some pay still use their debit card like it's unlimited and deal with the overages.
    – D Stanley
    Commented Dec 4, 2020 at 13:59

Does using a credit card actually build up your credit score or do you have to incur charges by not paying it off for X amount of time to help with your credit rating?

No. Absolutely, unequivocally NO. Anyone who says that is lying or repeating "conventional wisdom".

If I'm paying it off every month and using it for everything I buy, am I doing myself a disservice?


It depends on the ratio between the card balance's and the card's credit limit.

For example, if the credit limit is $12,000 and the balance is $3,000 then the "usage rate" is $3K/$12K = 25%.

Conventional wisdom is that any usage rate over 30% reduces your score, but have never seen confirmation from the scoring agencies.

I use my card for almost everything, and pay zero interest even though it's a high rate card. To keep the usage rate low, (and because it simplifies my monthly cash flow), I pay my card multiple times per month so that the usage rate on the bill is less than 2%.

  • Credit Karma reports that my credit score dropped 9 points this month because I charged $4,000 to cover a planned house project. My usual monthly CC bill is $1000. All my CC limits combined amount to $77,000 so the conventional 30% threshold may be a thing of the past. This isn't the first time this has happened either. The last time this happened my scored jumped back to its normal position after I paid the bill.
    – MonkeyZeus
    Commented Dec 4, 2020 at 18:50
  • @MonkeyZeus because you charged $4000, or because the closing balance was suddenly $3000 higher than normal (which might indicate that you're suddenly in financial difficulty)?
    – RonJohn
    Commented Dec 4, 2020 at 18:56
  • That's certainly a possibility, If only the credit bureaus would tell you how they calculate things then maybe we wouldn't see these outlandish ideas that carrying a balance is good for you. The $4000 charge was to a single card with a limit of $12k though so I guess that's 30% of that specific card's limit. It doesn't bother me because it will correct itself next month and I'm not applying for a mortgage any time soon!
    – MonkeyZeus
    Commented Dec 4, 2020 at 19:00
  • @MonkeyZeus yeah, people over-think some issues, and under-think others.
    – RonJohn
    Commented Dec 4, 2020 at 19:08
  • I had paid off all my balances before they were due, hitting 0% utilization on a credit report for the first time in my credit history (I've normally kept 2%-10%). I dropped 20 points. money.stackexchange.com/questions/132847/…
    – 8protons
    Commented Dec 4, 2020 at 22:48

I would like to expand upon the utilization aspect that RonJohn mentions in their answer. Utilization isn't as big of a factor on your score as paying off the bill on time it does have a high affect on your score along with any derogatory remarks (like accounts in collections).

One problem with the utilization rate, which you do want to keep below 30%, but close to it if you can, is that you don't really have a good way of knowing when the card issuer will actually submit your utilization amount to the credit bureaus. It could be at any point in your billing cycle. If you constantly pay the card off as you spend on it, you're almost certainly going to end up with a low utilization reported.

If you have a card that you're using for monthly consistent bills like utilities or subscription services, figure out at what point in the month the next payment is going to push you over your 30% threshold, and make sure you're paid down before that happens. Just don't push it to the last day payment is required before you start getting interest.

  • 2
    Welcome to Money.SE. One can easily figure out when their card issuer sends the data. Most of them, and until recently, I thought 'all', send the statement balance. I was happy-go-lucky, paying my bill in full the day before the statement was cut, to produce a reporting of a near-zero balance. Then, one report showed my balance as 'huge'. The card issuer changed practice and began reporting month end. Now, if were inclined to continue to play the game, I'd pay in full on the 29th/30th and again when the remaining bill is due. Commented Dec 4, 2020 at 11:37
  • "you don't really have a good way of knowing when the card issuer will actually submit your utilization amount to the credit bureaus" Every single one of my lenders reports the statement balance, which comes at a predictable time each month. It's quite easy to manage.
    – ceejayoz
    Commented Dec 4, 2020 at 11:50
  • But if you're worried about a high utilization rate, just get a few more cards. Especially if the companies happen to be offering sign-up bonuses :-)
    – jamesqf
    Commented Dec 4, 2020 at 17:05
  • To help keep your utilization low, you can submit 2 payments each month. Maybe this lines up with your paychecks, to make it easy to remember, but even though you're spending the same on the card, the balance is kept low(er) and it'll help when the usage is reported out of sync with the billing cycle. Commented Dec 4, 2020 at 19:28
  • @jamesqf, getting more cards can actually prevent you from getting other credit when you need it. The new creditor will see that you already have a bunch of credit "spoken for" in CCs and will reduce the amount they approve you for accordingly. They don't want to risk you not paying by suddenly maxing out your cards and then not being able pay it all. Commented Dec 4, 2020 at 19:31

There are a couple of things here...

  1. How much just having a credit card impacts your credit score.
  • In general having more types of credit helps your credit score. So if you have some long term loan (like a student loan or mortgage) and a credit card then that will improve your score compared to only having long term loans or only having credit cards. It's still possible to have a good score without having multiple types of loans.
  • In general having accounts that have been open for longer helps your credit score, so if you can keep a credit card around for a long time (even with minimal activity on it) that will help.
  1. How the way you use a credit card impacts your credit score, aka utilization.
  • Credit utilization is usually reported monthly, but when in the month depends on your exact card/credit company.
  • Credit utilization is how much money was on your balance when it was reported
  • It depends on your actual balance, not your statement balance or your overdue balance.
  • Utilization does not depend on paying interest, your overdue balance can be 0.
  • See chart at the end.
  • Overly high or overly low utilization can hurt your credit score. The "best" utilization is about 30%, but seriously anything between like 10% and 70% is not going to have that much of an impact.
  1. How quickly your credit score changes and how important it is for various things.
  • Some things have a more long term impact and are harder to change than other things.
  • Utilization is a very short term impact. If you had high utilization one month and then average utilization the next month, your score will change to reflect the normal utilization right away.
  • Age of accounts can be very slow to change because you obviously have to have those accounts for a while... (A few years.)

More about utilization... Say you get a brand new credit card with a credit limit of $100 and it goes like this... I have marked any event that changes your utilization with the utilization after that event:

Brand new card, cycle starts, utilization: 0
  spend $10, utilization: 10%
  spend $20, utilization: 30%
New cycle, you get a bill for $30
  spend $10, utilization 40%
  pay $30, utilization 10%
  spend $20, utilization 30%
Actual bill due date -- but already paid so no interest is accruing
  pay $20, utilization 10%
New cycle, you get a bill for $10
  credit limit increased to $200, utilization 5%

Credit issuers want to be sure that you they'll get their money back that they're lending you. Showing that you can make regular payments goes a long way to help build up their confidence. The algorithm that determines your credit score tracks revolving credit accounts (like credit cards, where you can continually borrow more and can pay it off on whatever schedule) separately from term accounts (where you borrow up front and then pay off according to a fixed schedule) but the way they're combined is complicated. My credit score didn't shoot up until I showed a solid history of paying both kinds of accounts off, with no lateness or missed payments. That's more important than whether or not you pay interest.


Looking over my credit history there is zero interest on it (while I have paid interest in the past I paid those things off long enough ago that they have aged off the report), but our scores are about 800. Thus you certainly don't have to pay interest to have a good score.

I always get something of a ding on it because of a lack of variety, but clearly that's not enough to hurt me. (In practice, above 740 it doesn't really matter.)

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